Zapata George says on the latest
Financial Sensethat almost all contracts for drillships and rigs are going to end with current projects!
"So, you have people who have drilling rigs, who are getting, a year ago you couldn't find a drilling rig that didn't have a contract on it. Now there are people who are saying to the rig companies, 'Yo, boys, when this contract expires you're getting this expensive little piece of equipment back!'" About 48 mins into the 1st hour.
Drillers to feel pain of oil patch downturn
In the report's "doomsday case" scenario, gas will fall to US$6/Mcfe, oil to US$50/barrel, and the credit situation will worsen. The result? Spending will slide 25% in 2009, and the rig count would drop to 344.
In the best-case scenario, the utilization rate would be 46%, based on expectation of 8.1 days per well, while the doomsday estimate would see that figure fall to 40%, "in line with industry troughs observed in 2002 and 2007."
In contrast:
Drillers say offshore outlook is positiveDiamond Offshore’s Dickerson said he has not seen any deterioration in rental rates for either shallow-water or deep -water drilling rigs.
“Even in the face of declining product prices, we see strength,” he said.
Reinforcing the point, the company announced Thursday a two-year, $452 million contract with France’s Total for Diamond’s semisubmersible Ocean Valiant rig.
The company’s board also increased its special cash dividend to $1.88 per share, from $1.25, and declared a regular quarterly dividend of nearly 13 cents per share.
Note this as well:
Today, 83 rigs are capable of operating in more than 5,000 feet of water, but more than 120 have been ordered for delivery by 2012, according to ODS-Petrodata.
“We expect some of those will not be built,” said Tom Kellock, head of consulting and research at the firm’s Houston office.
He cited a recent analyst report by another firm, predicting 32 of the rigs under construction and on order are at risk of being significantly delayed or not delivered.
Offshore driller executives said some of those rigs are already being shopped around by companies that can no longer afford to build them. But they suggested the prices are too high at the moment.
“So far, I don’t think they’re as hungry as they should be,” Noble’s Williams said, noting that Noble can build a deep-water rig for $150 million less than the $740 million he has heard quoted.
Plummeting oil price pushes Scots explorers to the brinkThe industry is awash with rumours that certain Scottish oil explorers are finding that the facilities they thought were secure are vulnerable.
In recent weeks, this has already hit Canadian North Sea explorer Oilexco, which lost almost a fifth of its share value after having to hastily find alternative creditors to supply $300 million (£185m) funding, and London-based Sterling Energy, which was forced into a rights issue to cover impending debt repayments.
Almost every oil explorer's share price has hit rock-bottom levels.
Peter Nicol, an oil analyst at Tristone Capital, said that the falling oil price was exacerbating banks' unwillingness to extend credit, especially because RBS and HBOS are two of the main lenders to the sector.
He said: "The banks are starting to look at the value of projects and saying that it is not looking like a good deal, and in some cases they can review existing credit. That's what happened with Sterling Energy."
